Hi everyone! New member from Long Island New York!

26 Replies

Hello BiggerPockets community. I stumbled on to some BP podcasts and was hooked. I always liked the idea of real estate but never stopped to think about how it could be turned into a investment opportunity. I read the BP  beginners guide and "7 years to 7 Figures" by Brandon Turner and so far I like what I am seeing. I have talked to the people in my circles and it seems many are interesting in investing and many have skills/values they bring to the table (ie RE Attorney, Funding etc). 

Luckily I do not need supplemental income so all the proceeds would be going towards further investments. I think I like the buy and hold strategy and it seems single family and smaller multifamily (duplex) units are the easiest to work with when first starting off. 

I had a few questions:

1.) I would prefer to have a partner for at least some of the deals at the beginning, what are some recommendation of how to structure the LLC or some of the difficult points that are better to discuss/review/understand before partnering with someone?

2.) Investing in Long Island NY, which would be natural for me due to my location is not as easy as it requires more startup capital. Brandon Turner underlines that if you can't stick to the strict numbers in your region, branch out.  I have been told Cleveland Ohio may be a good investment opportunity. What are the cons/pros from those who know first hand.  And what circles should I get involved in to get more information?

3.) What are some other regions worth exploring? I prefer to stretch 20k-40k of my initial investments to be able to purchase as many properties as that would allow (down-payments) as I have excellent credit and would be perusing conventional funding from banks. 


Thanks in advance. 

Welcome aboard Boris,

Its Great that you choose the Buy and Hold strategy especially that you are not currently in need of any additional income.

With regards to your question about partnering up, First be clear about why you would need a partner in the first place. Many people partner up due to-a specific need either start up capital or full funding. Many people would partner up per deal basis as it is in my case. And some don’t have the time to do it all on their own, so they need an active partner to look for deals analyze negotiate & operate them while they take a passive position.
By Looking at your own needs would answer most of your questions about partnering up with someone.

With regards to your 2nd Question about area, If I understand you correctly you don’t have issue with credit or funding only I guess, startup capital and that might be your mental barrier to investing in your area. I think your 2nd questions answers you first in some regard, here is where you might need a partner. Remember you’re not gonna buy a deal which makes no sense regardless if it’s in your area or elsewhere.
A deal that make sense for yor buy and hold strategy is which positively cash flow’s. And if the only block to investing in your area is start up capital there is where you might need a partner or borrow money from friends and family for your start up capital So you can invest in your area. I keep on stressing the point about your area because that’s where you know best or you think you know best, but you have a much better chance of learning it a whole lot faster than starting in a new area entirely.

With regards to your 3rd question about some other areas,this is something that you have to research on your own Based on solid real estate principles I.E where there is employment and there is a demand for Rentals.
Now employment could be near a hospital, school, even in a weaker area or town And if you have solid transportation go little farther in to the respective city since your prospective tenants will most likely travel back-and-forth. But you definitely need to have those factors 1) Employment and A need for rental.
If most people in the area owns their house, you have a much lesser chance Employing you’re buy& hold strategy in an area where most people are buying to live in it, as well as it will most likely be inflated and not make financial sense for you as an investor.

Interesting you mention in Cleveland Ohio I had two friends travel down there Recently And they mentioned to me that there’s a bunch of good rental income in the area for reasonable Rates compared to our neck of the woods like Long Island New York or Brooklyn New York.

I sincerely hope I was of some help,

Wishing you much success.
Joel Silberstein

@Boris Alayev Welcome to BP!

Being from about the same area as you, I can see why you’d choose to look out of state. The prices here are WAAAY inflated and the taxes are completely insane! There appears to be a bit of a rental market, but it is way below even 1%... close to 0.5%. I can’t see how the numbers work, especially considering the exorbitant taxes.

@Boris Alayev Welcome to BP community! 

You need to start out by educating yourself first. It's great you were able to pick a strategy that you prefer. I hope you considered the amount of time you will have to spend on it and ready to do it. Alternatively, there are options for those they'd like to spend very little time on investments. Keep that in mind when making the decision. 

In terms of your questions, I second @Joel S.  

I'll also add that to when partnering up with someone, have RE attorney draft Operating Agreement and spell out all the terms.

Best!

@Alina Trigub , when you mention the time needed to spend on the strategy is that even if I chose to have the property managed? I understand that even with the management firm there is some time you need to invest, but I hope to invest that time in finding more deals and building the portfolio and let the management firm deal with the day to day. 

Originally posted by @David Rosenberg :

Boris Alayev Welcome to BP!

Being from about the same area as you, I can see why you’d choose to look out of state. The prices here are WAAAY inflated and the taxes are completely insane! There appears to be a bit of a rental market, but it is way below even 1%... close to 0.5%. I can’t see how the numbers work, especially considering the exorbitant taxes.

 Yea it is not very realistic to begin buying investments where the properties are 400k-700k and taxes in excess of 20k. 

Hey Boris! I’m on the island as well and when searching for some networking opportunities found the Suffolk county real estate investors club. The next meet up is coming up in Huntington station and covers 1031 exchanges. My wife and I are attending and it would be great to meet some other local investors.

Originally posted by @Sean Brodarick :

Hey Boris! I’m on the island as well and when searching for some networking opportunities found the Suffolk county real estate investors club. The next meet up is coming up in Huntington station and covers 1031 exchanges. My wife and I are attending and it would be great to meet some other local investors.

 Sean, that sounds great. I will try to find some info on the club in Suffolk and try to join. Do you have to be a member to attend? 

Hi Boris

I am on the Island as well.  The best way is to go directly to sellers, anything a new investor sees is not a good deal.  Once you are known you will have deals sent to you before they go to others. 

I do not know much about out of state except what I hear from others.  One thing I heard a few times is there are so many new developments in areas such as the Carolina's that the rental market can get soft fast.  Building a new apartment complex on the Island can take half a decade which means people shy away from it.  

Message me if you would like to talk sooner.  

Originally posted by @Craig Schneider :

Hi Boris

I am on the Island as well.  The best way is to go directly to sellers, anything a new investor sees is not a good deal.  Once you are known you will have deals sent to you before they go to others. 

I do not know much about out of state except what I hear from others.  One thing I heard a few times is there are so many new developments in areas such as the Carolina's that the rental market can get soft fast.  Building a new apartment complex on the Island can take half a decade which means people shy away from it.  

Message me if you would like to talk sooner.  

 Thanks for the insight Craig. I will reach out. 

Originally posted by @Boris Alayev :

Hello BiggerPockets community. I stumbled on to some BP podcasts and was hooked. I always liked the idea of real estate but never stopped to think about how it could be turned into a investment opportunity. I read the BP  beginners guide and "7 years to 7 Figures" by Brandon Turner and so far I like what I am seeing. I have talked to the people in my circles and it seems many are interesting in investing and many have skills/values they bring to the table (ie RE Attorney, Funding etc). 

Luckily I do not need supplemental income so all the proceeds would be going towards further investments. I think I like the buy and hold strategy and it seems single family and smaller multifamily (duplex) units are the easiest to work with when first starting off. 

I had a few questions:

1.) I would prefer to have a partner for at least some of the deals at the beginning, what are some recommendation of how to structure the LLC or some of the difficult points that are better to discuss/review/understand before partnering with someone?

2.) Investing in Long Island NY, which would be natural for me due to my location is not as easy as it requires more startup capital. Brandon Turner underlines that if you can't stick to the strict numbers in your region, branch out.  I have been told Cleveland Ohio may be a good investment opportunity. What are the cons/pros from those who know first hand.  And what circles should I get involved in to get more information?

3.) What are some other regions worth exploring? I prefer to stretch 20k-40k of my initial investments to be able to purchase as many properties as that would allow (down-payments) as I have excellent credit and would be perusing conventional funding from banks. 


Thanks in advance. 

 Welcome to the site Boris.

Hi @Boris Alayev - I’m in a similar boat. Born on Long Island, I’ve lived in NYC since ‘95, and the numbers in NYC are even more challenging than they are on the island. I’ve solved it by investing in the Capital District and surroundings, and Buffalo(to a lesser degree.) 

Investors in NYC(and Long Island, I suppose,) depend on appreciation as a component of their return. I’ve always been more of a bird-in-the-hand kind of investor- the property must pay me now via cash flow, and appreciation is icing. 

Out of state investing can work for you, but consider areas that are within driving distance first- near NJ, and upstate NY for instance. If those don’t work for you, segue towards a spot reachable by commuter flight. Good luck,

MG

I may need to start a new thread on this but putting the question out there....

Seems there are debates on if an LLC is required. Some say the costs associated with an LLC are not worth the benefits it provides because an umbrella policy for some $25-$30 a month can do the same. I am learning that conventional lenders will NOT mortgage a house under an LLC (not sure why) even if the LLC is a pass through vehicle with one member.

I have great credit and would prefer to leverage that and finance the investment homes. How are some of the seasoned investors getting conventional loans? Is the umbrella policy the way to go and just use my SSN/Name for all properties as a sole proprietorship type of operation? I want to be ready with financing so I can more quickly on a few deals. 

If I use my name on all properties do I still get all the TAX benefits? 

Thanks. 

Originally posted by @Anne-Marie Singer :

Hi Boris Alayev did you start another thread or make any progress on the LLC vs Sole Proprietorship issue in Suffolk County/ LI? I've been curious about this issue as well.
Thanks!

I did not start a new thread on this yet. So far have just been reading anything I can find. From what I understand, if you have an LLC, you lose the flexibility of using conventional funding as most banks will not give out a loan under an LLC.

Welcome aboard!

Long Island is difficult due to the high property tax burden. Which usually equates to 30-40% of effective gross income. Conversely, property values and low cap rates (3-5%) in the NYC boroughs make it tough to cover the debt service. I believe there is still deals out there although much tougher to find. Outside of NY is like night and day in terms of cap rates and price per square foot/ unit.

@Sam Monderer  

We meet monthly at the Microsoft store in the Roosevelt Mall it's very educational.  There is also a BP networking on the 28th in Rockville Centre but run by someone else I have been told that's also good and I plan on attending.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you